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Zerodha Eyes Investment Banking With SEBI Merchant Banking Licence
Zerodha is India’s biggest stock-trading app. (A stock is a small piece of a company that you can own.) Now Zerodha wants to do a new kind of work. It has asked for a special permit called a merchant banking licence. A merchant bank helps companies get money and sell their shares to the public. A licence is an official permission to do a job.
Zerodha asked SEBI for this permit. SEBI stands for the Securities and Exchange Board of India. It is the group that watches over the stock market and makes the rules. Zerodha wants the top level of permit, called a Category-I merchant banking licence.
A news report by Business Standard says Zerodha sent in this request in April 2026. The company is in Bengaluru. It is still waiting to hear yes or no.
A Zerodha spokesperson confirmed the news to Entrackr. The company said it has applied for the merchant banking (Category 1) licence. It will tell us more about its plans once it gets the licence.
What the licence would let Zerodha do
With this permit, Zerodha could run IPOs. An IPO (Initial Public Offering) is the first time a company sells its shares to everyone on the stock market. Zerodha could also help companies find money. Merchant bankers do the paperwork. They set the price of the shares. They sell those shares. They also show companies other ways to get money.
This would give Zerodha a “full-stack” business. That means it could help a company from start to finish. It could help the company get money. It could help it list (join) the stock market. Then normal people could buy and sell that company’s shares on the Zerodha app.
Why now? A busy IPO market
The timing is not random. India’s IPO market is very busy right now. Hundreds of startups and new companies want to go public soon. (Going public means selling shares to everyone for the first time.) Each one needs a merchant banker. By starting now, Zerodha could win some of this work.
Zerodha has grown a lot over the years. It does much more than just trade stocks now. It runs mutual funds. (A mutual fund pools money from many people to invest together.) It manages money for clients. It lends money. It also puts money into startups through a part of the company called Rainmatter. And it helps people invest in other countries. Adding investment banking would make Zerodha a one-stop shop for money services.
What a Category-I licence means
SEBI gives merchant bankers a “Category-I” permit. This is the top, full-service level. It lets the holder do the biggest jobs in the stock market. It can run a company’s IPO. It can do underwriting. (Underwriting means the bank promises to buy any shares that no one else buys, so the sale does not fail.) It can also tell companies how to raise money. In short, a Category-I licence opens the door to all the IPO work.
Zerodha is special because it is bootstrapped. (Bootstrapped means it grew on its own, without taking big money from outside investors.) Even so, it is now India’s largest retail broker by active clients. (A retail broker helps normal people buy and sell shares. Active clients are people who use it often.) This gives Zerodha two rare strengths. First, it has a huge group of everyday investors who already trust the brand. Second, it built its own strong technology. If Zerodha brings its cheap, tech-first style to investment banking, it could shake up an industry that charges high fees.
Key facts at a glance
| What was filed | Category-I merchant banking licence application |
| Regulator | SEBI |
| When | April 2026 (awaiting approval) |
| What it unlocks | Managing IPOs, capital-raising advice, merchant banking services |
| Existing rivals | JM Financial, Kotak Mahindra Capital, Axis Capital, ICICI Securities |
More competition for old players
For a long time, big names have ruled the merchant banking world. These include JM Financial, Kotak Mahindra Capital, Axis Capital and ICICI Securities. If Zerodha gets its licence, it would join as a fresh, low-cost rival. Hundreds of companies backed by investors want to go public soon. Zerodha could fight hard to win that work.
Why it matters (especially for India and founders)
This is good news for founders. (A founder is a person who starts a company.) More merchant bankers means more choice. It may also mean lower fees when you sell your company’s shares to the public. Zerodha is famous for cutting costs in trading. It may try to cut costs in investment banking too.
It also shows where Indian finance is going. Zerodha started by helping small traders. Now it is reaching for the big deals once done only by large banks. Many new companies are getting ready to go public. These are the kind of startups raising fresh money today that may need a banker tomorrow.
FAQ
What is a merchant bank in simple words?
A merchant bank helps companies get money. For example, it can sell a company’s shares in an IPO. It can also give advice on big deals. It works with companies, not with everyday savers like a normal bank does.
Has Zerodha got the licence yet?
No. It has only asked for it. It sent the request in April 2026. It is still waiting for SEBI to say yes. Until then, Zerodha cannot run IPOs or offer merchant banking services.
How is this different from buying shares on Zerodha?
When you buy shares on the Zerodha app, you use its trading service. You are buying shares that already exist on the market. Merchant banking is the other side. It helps a company make and sell brand-new shares to the public for the first time. The licence would let Zerodha work on both sides of the market.
The takeaway
Zerodha’s move into investment banking shows a big dream. It wants to be there at every step of a company’s money journey. If SEBI says yes, India’s busy IPO market may get a strong new player that keeps costs low.
Source: Entrackr.